Wednesday, September 06, 2006

My advice if you are 50 or over is to scale back on your 401(k) contributions so you invest just enough to get your company match. Then use the extra money that will show up in your paycheck -- yes, even after the fact that it's taxed -- to accelerate your mortgage payments.Will you end up with less in your 401(k)? Of course, but you'll need a lot less because you won't be stuck paying your mortgage once you retire.3. Neglecting to make a will.So many women tell me they want to draw up a will and revocable living trust, but their husbands just don't want to talk about it.I understand that contemplating death isn't easy, but if you want to protect your loved ones, it's absolutely necessary. Let's face it: We can only guess the direction of the Dow and what Ben Bernanke will do at the next Fed meeting (or six Fed meetings from now).But one thing we all know for certain is that we'll die. And dying without a will and trust is just flat-out selfish; it creates major hassles for your loved ones, especially if you don't have a revocable living trust.Without a trust, your "estate" must go through the probate system before any of your assets can pass to your heirs. That can take time and money, and it makes your financial affairs public record. With a trust, your assets pass seamlessly to your beneficiaries.4. Refusing to take the investing long view.I'm all for being on top of your investments and making timely changes in your portfolio. But men have a tendency to be quicker on the trading trigger that tends to hurt performance.A few years ago, a study of the trading records of men and women revealed that while everyone tends to reduce their returns by trading -- versus a buy-and-hold strategy -- men traded 45 percent more than women, and in the process reduced their returns by about 1 percent more.By the way, the same finance professors who conducted the study also found that the most active traders -- men and women -- underperformed the least active traders to the tune of more than 5 percentage points a year.5. Assuming the role of the family's sole money manager.In the Allianz survey, 38 percent of women respondents said that money was a cause of friction in their marriage. (Some good news: just 2 percent said sex was a problem. Phew.)Typical topics of dissension were not enough savings, having too much debt, him spending too much, or her spending too much. It's interesting to note that while a small percentage of the women surveyed said their husbands handle the money decisions, a large percentage of men said that they did so.If that's the case in your relationship, then you're completely out of sync as a couple. Not just because you give different answers to that question, but because the only correct answer if you want to stay happy is that you're both equally involved with money decisions.Sure, you can divide all the various financial tasks, but at the end of the day you both need to be equally responsible for your money. Who earns it is irrelevant; when it comes to how that money is spent, invested and saved, however, there has to be a shared and balanced sense of responsibility. If you aren't in synch on this, you're going to have relationship problems that no amount of money can fix.